Impact of the Level of Disclosure of Financial Information on the Pricing of Shares in the Context of Adverse Selection
PDF (Português (Brasil))

Keywords

Informational asymmetry. Adverse selection. Asset pricing. Stock market. Experimental accounting.

How to Cite

Lima, D. H. S. de, Rodrigues, J. M., Silva, C. A. T., & Silva, J. D. G. da. (2012). Impact of the Level of Disclosure of Financial Information on the Pricing of Shares in the Context of Adverse Selection. Review of Business Management, 14(43), 159–175. https://doi.org/10.7819/rbgn.v14i43.748

Abstract

Managers know more about the performance of the organization than investors, which makes the disclosure of information a possible strategy for competitive differentiation, minimizing adverse selection. This paper’s main goal is to analyze whether or not an entity's level of disclosure may affect the risk perception of individuals and the process of evaluating their shares. The survey was carried out in an experimental study with 456 subjects. In a stock market simulation, we investigated the pricing of the stocks of two companies with different levels of information disclosure at four separate stages. The results showed that, when other variables are constant, the level of disclosure of an entity can affect the expectations of individuals and the process of evaluating their shares. A higher level of disclosure by an entity affected the value of its share and the other company’s.

Key words: Informational asymmetry. Adverse selection. Asset pricing. Stock market. Experimental accounting.

https://doi.org/10.7819/rbgn.v14i43.748
PDF (Português (Brasil))

If a paper is approved for publication, its copyright has to be transferred by the author(s) to the Review of Business Management – RBGN.

Accordingly, authors are REQUIRED to send RBGN a duly completed and signed Copyright Transfer Form. Please refer to the following template: [Copyright Transfer]

The conditions set out by the Copyright Transfer Form state that the Review of Business Management – RBGN owns, free of charge and permanently, the copyright of the papers it publishes. Although the authors are required to sign the Copyright Transfer Form, RBGN allows authors to hold and use their own copyright without restrictions.

The texts published by RBGN are the sole responsibility of their authors.

The review has adopted the CC-BY Creative Commons Attribution 4.0 allowing redistribution and reuse of papers on condition that the authorship is properly credited.